Software developers face rising unemployment as Israel’s tech sector evolves
Jobless rate hits 3.5% while AI and data jobs drive new hiring trends.
A slight recovery in the high-tech labor market in 2025. After a decline in 2024, the number of employees increased by 2.3%, from 396,000 in 2024 to 405,000 in 2025. This reflects an increase of 4% in technological professions and a decrease of 0.8% in non-technological professions. The vacancy rate in high-tech also increased from 4% to 4.8%.
However, the recovery did not extend to software developers. Their unemployment rate rose to 3.5%, and there are about 8,000 job seekers among software developers and systems analysts.
This is according to the high-tech chapter of the Ministry of Labor’s 2025 Israeli Labor Market Report, which will be published in the coming days. The high-tech sector accounts for about 20% of GDP and more than half of Israeli exports. It employs over 400,000 workers, representing about 11.5% of the economy’s workforce. It contributes 36% of the state’s income tax revenue from wages. The average wage in the sector is 2.7 times higher than wages in other parts of the economy.
After years of accelerated growth, employment growth in the high-tech sector slowed in 2023-2024. The number of employees in the sector fell by more than 1%, from 401,000 in 2023 to 396,000 in 2024. According to the Ministry of Labor, “This slowdown reflects reduced investment and hiring due to the global slowdown and uncertainty in international markets, the high-interest-rate environment worldwide, political and social instability in Israel in 2023, and the direct consequences of the Swords of Iron war, which deterred foreign investors.”
In 2025, an additional 9,000 workers were added, representing growth of 2.3%. However, this is significantly lower than the rates recorded in 2018-2022. In 2022, for example, growth reached 10.7%. The slowdown in employment in the previous two years was evident in both technological and non-technological professions. In 2025, employment recovered primarily due to growth in technological professions, which increased by 4%, while non-technological professions declined by 0.8%.
The decline in demand for high-tech workers was also reflected in vacancies, which fell from a peak of nearly 6% of all high-tech positions in 2018-2019 to an average of about 4% in 2023-2024, similar to the economy as a whole. In 2025, the trend reversed, and the vacancy rate in high-tech rose to 4.8%, compared with 4.5% in the broader economy.
About 20% of those employed in technological professions work in information technology fields, including systems analysts, web and multimedia developers, and database and network administrators. Since 2023, growth in these professions has accelerated, and they have accounted for most of the employment increase in the high-tech industry in recent years.
Almost a quarter of workers in technological professions are software developers, and the vast majority are employed in the high-tech industry. After a period of double-digit growth between 2018 and 2022, the number of employed software developers stabilized at about 80,000. Their unemployment rate, which had been low over the past decade, rose to 3.5% in 2025 (with no similar increase recorded in other technological professions). According to the Employment Service, the number of job seekers in high-tech has doubled since 2022, reaching about 16,300 at the end of 2025. Most of this increase is concentrated among software developers and systems analysts, who account for about 51% of all job seekers, more than 8,000 people.
According to Jobify, an AI-based job search platform, about 8,000 to 10,000 high-tech jobs are posted each month, of which about 4,000 are in software development. Although this field continues to lead hiring activity, it has stagnated, with no growth in job postings from mid-2024 to the end of 2025. In contrast, the data and artificial intelligence sector stands out, growing by about 50%.
Ministry of Labor Director General Rubi Shemesh said: “The data shows that the Israeli high-tech labor market is changing. Demand is gradually shifting from traditional software professions to artificial intelligence, data, and hardware, while support roles are eroding. The main challenge for the Ministry of Labor is to close the gap between workers’ skills and the economy’s evolving needs through training, reskilling, and adapting the education system to the new technological reality.”
